By Polya Lesova, MarketWatch FRANKFURT (MarketWatch) -- Oil futures declined on Tuesday after they surged in the previous session, as the U.S. dollar's modest rebound encouraged investors to lock in some gains. Crude oil for December delivery fell 38 cents, or 0.5%, to $78.52 a barrel in electronic trading on Globex. "Crude-oil prices are down slightly, as a slight strengthening in the dollar is forcing a modest retracement," wrote Edward Meir, analyst at MF Global, in a note to clients. "We suspect that the $1.50 level [vs. the euro] will eventually give way, ensuring that commodities will push higher still," he said. The dollar rebounded on Tuesday after the previous session's sharp drop, supported by waning risk appetite. The euro fell 0.4% to $1.4902. The dollar index (DXY 75.20, +0.36, +0.49%) , which tracks the performance of the greenback against a basket of other major currencies, traded at 75.258 in recent trading, up from 74.908 late Monday. Crude futures rose more than 3% Monday, boosted by upbeat global economic reports and the drop in the dollar. The greenback fell to its lowest level since August 2008 on Monday. Oil is denominated in dollars, so a weaker dollar makes the commodity less expensive for investors holding other currencies. Energy traders are awaiting inventories data from the American Petroleum Institute at 4:30 p.m. Eastern on Tuesday. Analysts polled by Platts expect a 1.2-million-barrel build in U.S. commercial crude inventories for the week ended Nov. 13. They also project an increase of 950,000 barrels in gasoline inventories and a decline of 700,000 barrels in distillate supplies. The Energy Information Administration will report its more closely watched data at 10:30 a.m. on Wednesday.

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